Here's a great way to give your children a huge head start in
life: Teach them smart money habits.
You may feel a little uneasy about this parenting task. After
all, you may not be all that confident about your own money-management
skills. But you probably know more than you think you do, and
you will play a critical role in shaping your children's attitude
toward money.
When do you start? As soon as a child can count
and begin to distinguish between coins, he or she is ready for
their first financial strategy: Don't eat the money. Here's how
to teach about money at each stage.
Toddlers and Preschoolers
At this age children can sort coins, learn their value and begin
to understand how money gets converted into "things."
5- to 7-Year Olds
By
the time they start school, many children are ready to receive
an allowance. The goal is to give your child the opportunity to
budget, spend and save his or her own money. Most experts agree
an allowance should not be linked to chores or grades. Extra money
for special jobs such as cleaning out the garage is fine.
The amount of the allowance depends on which expenses
the child is expected to pay, so sit down with your child and
map out a weekly or monthly budget. One suggestion is to pay 50
cents per week for each year of the child's age.
You can encourage saving by dividing the allowance
among three jars. Money in jar 1 can be spent on whatever the
child chooses. Jar 2 money is saved for a more expensive item,
like a toy or book. Jar 3 is reserved for long-term savings, such
as a college fund. Pay interest (even a few pennies at a time)
to jar 3 money. Children are fascinated when money makes money.
8- to 10-Year-Olds
Make a trip to the credit union to open a
savings account . Let your child fill
out the deposit slip, and explain that the credit union will pay
interest.
Set a good example
Give your child a weekly allowance
Set up a three-jar system to teach spending
and saving habits
Involve your children in family spending
decisions
Help older children choose a stock or
mutual fund
Set up a Roth IRA for children with earned
income
Include your child in family discussions of finances,
such as budgeting and planning for family vacations. Explaining
how you decided to forgo the fancy sports car in exchange for
a sedan and a family trip to the beach can teach about trade-offs
and your family's values.
11- to 13-Year Olds
If your child shows interest in the stock market, choose a few
stocks, such as McDonald's and Disney, and follow them for a few
months. If the child has earned income from a paper route or baby-sitting,
for example, he or she can set up a Roth IRA that will accumulate
a tax-free retirement nest egg. A $1,000 investment at age 12
can grow to over $150,000 at age 65.
This credit union is federally insured by the National Credit Union Administration
by
Jill Gianola (courtesy of 
